| | Benefit Briefs | | Workers Would Trade Control for Guaranteed Income | | Current workers and retirees would trade control
of managing their retirement assets in an income solution for investment
growth, flexibility and guaranteed lifetime income, a survey finds. When asked
to name the most important products or features they wanted in an income plan,
60% of respondents to the “Finding the Right Mix: Retirement Income Attitudes
and Preferences” study from the LIMRA Secure Retirement Institute selected the
potential for investment growth. Flexibility in changing the amount of income
was chosen by 55% of those surveyed, and just more than half say income that is
guaranteed for life is most important to them. When asked to rank their top
five plan features in terms of priority, guaranteed lifetime income received
the highest average score. | | Human resources consulting firm Buck Consultants
at Xerox is making changes to its retirement plans. The Buck Consultants
Retirement Plan, a defined benefit pension plan, will be frozen, effective
January 1, 2015. At the same time, the Buck Consultants Savings Plan (a 401(k)
plan) will be enhanced with an increased company match and a broader definition
of eligible pay. | | | Buyer's Market | | Wilshire Associates Incorporated announced the
launch of two indices designed to provide insight into an investment category
that is difficult to benchmark—liquid alternatives. One index, called The
Wilshire Liquid Alternative Index, aims to deliver a broad market measure for
the performance of diversified liquid alternative investment strategies that
are implemented in mutual fund structures. The other index, known as the
Wilshire Focused Liquid Alternative Index, embeds screening criteria designed
to help firms build and monitor investable liquid alternative products in other
formats, such as exchange-traded funds (ETFs). | | | Industry Voices | | Insights: Language Barriers | | My kids are learning to speak two languages, and
as I do not speak the second well (their exposure comes from their caregiver,
classes and play dates with friends), there can be trying times when they
attempt to express themselves and my husband and I don’t understand. What we
thought was cute babbling from my younger daughter when first learning to speak
was actually Spanish; she was asking for something, staring at us with the
expectation that we’d help—but not
understanding why we didn’t. How often does that disconnect happen in your
workplace? Maybe it starts with you, the plan sponsor, failing to comprehend
why participants don’t take steps to save more to improve their retirement
outcomes; maybe it’s the participants seemingly frustrated because you can’t
give a specific answer when they ask, “What should I do?” | | | Economic Events | | In the week
ending August 2, the advance figure for seasonally adjusted initial claims for
unemployment insurance was 289,000, a decrease of 14,000 from the previous
week’s revised level, the Labor Department reported. The previous week’s level
was revised up by 1,000 from 302,000 to 303,000. The four-week moving average
was 293,500, a decrease of 4,000 from the previous week’s revised average. This
is the lowest level for this average since February 25, 2006 when it was
290,750. The previous week’s average was revised up by 250 from 297,250 to
297,500.
The average interest rate for a 30-year fixed-rate
mortgage is 4.14%, up from 4.12% one week ago, according to Freddie Mac. The
average interest rate for a 15-year fixed-rate mortgage is 3.27%, up from
3.23%.
| | | Market Mirror | | Thursday, the Dow closed 75.07 points
(0.46%) lower at 16,368.27, the NASDAQ decreased 20.08 points (0.46%) to
4,334.97, and the S&P 500 fell 10.67 points (0.56%) to 1,909.57. The
Russell 2000 lost 5.79 points (0.51%) to finish at 1,119.76, and the Wilshire
5000 was down 103.03 points (0.51%) at 20,216.38.
On the NYSE, 3.2 billion shares traded, with
a slight lead for decliners. On the NASDAQ, 2.8 billion shares changed hands,
with 1.8 declining issues for every advancing issue.
The price of the 10-year Treasury note increased
17/32, decreasing its yield to 2.414%. The price of the 30-year Treasury bond
climbed 29/32, bringing its yield down to 3.226%.
| | | Rules & Regulators | | Appellate Court Sends RJR Stock Drop Suit Back for Review | | A lower court applied the wrong standard when
determining that R.J. Reynolds Tobacco Company (RJR) proved its fiduciary
breach did not cause losses to retirement plan participants, an appellate court
ruled. In a case alleging that RJR breached its fiduciary duties under the
Employee Retirement Income Security Act (ERISA) when it removed and sold
Nabisco stock from its plan without a proper investigation into the prudence of
doing so, the 4th U.S. Circuit Court of Appeals agreed with a district court
finding that RJR did breach its fiduciary duty of procedural prudence and so
bore the burden of proving that this breach did not cause loss to the plan
participants. But, the appellate court found the lower court failed to apply
the correct legal standard in assessing RJR’s argument that its breach did not
cause losses to participants. | | Anheuser-Busch Pension Participants Owed Enhanced Benefits | | A federal appellate court has determined that
certain participants of Anheuser-Busch’s pension plan are due enhanced benefits
as a result of actions following the firm’s acquisition by InBev. The 6th U.S. Circuit
Court of Appeals found that the language of the plan document section about a “change
in control” requires only that the individual’s “employment with the Controlled
Group” be involuntarily terminated, not that the individual experience a job
loss or some otherwise undefined period of unemployment. | | | Financial Sense | | Alternative Investments Boost State Pensions’ Returns | | State pension systems earned a median 7.2%
annualized return over the 10 years ended June 30, 2013, with individual
pension fund returns ranging from 5.0% to 8.8%, according to Cliffwater LLC. The
“Cliffwater 2014 Report on State Pension Asset Allocation and Performance”
finds that efforts by state pension systems to do better than a simple mix of
stocks and bonds through alternative investments has been largely rewarded.
Real estate and private equity allocations, where there is a large sample of 10-year
returns, performed well. | | During June, exchange-traded funds (ETFs)
worldwide collected $33 billion in net flows, $10 billion higher than the prior
month, according to a report from Strategic Insight (SI). The June “ETF
FlowWatch” report from SI, an Asset International company, also finds that for
June, equity ETFs from the U.S., Europe and Asia raised $34 billion, of which
$24 billion came from the United States. Bond and ‘other’ ETFs saw slight
redemptions, while mixed ETF flows remained flat for the month. | | DB Plan Sponsors to See Extended Funding Relief | | A bill awaiting President Barack Obama’s
signature would provide extended funding relief for defined benefit (DB)
retirement plan sponsors. The bill provides temporary funding to ensure that
the Highway Trust Fund does not run out of money, in part from lowering
corporate tax deductions and increasing corporate taxes from allowing companies
to defer pension funding requirements. The bill extends relief provided in the
Moving Ahead for Progress in the 21st Century Act (MAP-21)—passed in 2012—which
allowed defined benefit plans to discount future benefit payments to a present
value using a 25-year average of bond rates rather than a two-year average. In
a report from Moody’s Investor Services, Wesley Smyth, vice president and
senior accounting analyst for Moody’s in New York City, notes that the Congressional
Budget Office estimated that the new legislation would result in $18 billion of
additional tax revenue, this year through 2019. Using an assumed tax rate of
35%, this additional revenue would equal more than $51 billion in lower deductions
(i.e., pension contributions). | | | Small Talk | | ON
THIS DATE: In
1876, Thomas Edison received a
patent for the mimeograph. The mimeograph was a “method of preparing
autographic stencils for printing.” In 1899, the refrigerator was patented by A.T. Marshall. In 1966, Michael DeBakey became the first
surgeon to install an artificial heart pump in a patient. In 1974, U.S. President Nixon announced
that he would resign the following day. In 1978,
the U.S. launched Pioneer Venus II,
which carried scientific probes to study the atmosphere of Venus. In 1991, the U.N. Security Council
approved North and South Korea for membership.
And now it’s time for FRIDAY FILES!
| | How to cool a drink in two minutes. | | How to fold a shirt in two seconds. | | In Pittsburgh, Pennsylvania,
a 35-year-old woman who had left a concert noticed a car idling in the parking
lot. There was no one in the driver’s seat, and despite someone in the
passenger seat and another person in the back seat, she got into the driver’s
seat and announced she was taking the car to drive to where her car was parked.
Turns out, the car was an unmarked police car, and the two individuals in the
car were undercover police officers. The third undercover officer had stepped
out to make a phone call. Before the woman could take off, the officer in the
passenger’s seat went around the car and removed the woman from the driver’s
seat, and after a brief struggle she was arrested. According to the Pittsburgh
Post-Gazette, one officer wrote in a police report the woman had, “an
overwhelming odor of alc.oholic beverage emanating from her person.”
In Shrewsbury, Massachusetts,
police responded to 911 calls from motorists who spotted a 69-year-old man
doing yard work—sans clothes. According to the Smoking Gun, the responding
officer spotted the man “completely nu.de, blowing off his driveway with a leaf
blower.” The man was “intoxicated and belligerent towards police” when
questioned. He
was arrested for “open and gross lewdness.”
| | Apparently, this kid has a future in
broadcasting, and apparently, he has never, ever been on live television
before. | | In Stillwater, Minnesota, a
café has come up with a controversial solution to help pay workers a higher
minimum wage—charging customers a “minimum wage fee.” It is adding a 35-cent
fee to meal tabs. The café owner said the fee is needed to offset the 75-cent
wage hike that took effect August 1. Even with only half a dozen servers, the
owner says it will cost him $10,000 more a year to pay servers $8 an hour
instead of the federal rate of $7.25 an hour, the Minneapolis Star Tribune
reports. It has set off a firestorm of debate, with the café being inundated
with phone calls and people taking to Facebook to encourage others to boycott
the roadside cafe. A café manager said they are shocked at what’s going on.
“We’re all appalled at the response for just protecting … employees. We’re just
doing what we have to do.”
In Wagoner, Oklahoma, teachers
returned to school this week, and one new teacher made a bad first impression. The
49-year-old woman was arrested Monday after she showed up for her first day of
work at Wagoner High School into.xicated, pantless and shoeless, according to
the Wagoner Police Department. “She was found in an empty classroom by an assistant
principle,” the police chief at the Wagoner Police Department told ABC News.
“He found her with no pants on. He has never seen her before.” The woman told a
police officer she was drinking orange juice and vod.ka on her way to work. She
said there was more stocked up in her car, which was parked in the school
parking lot.
| | A beautiful example of strangers coming together
for the common good. | | In Rome, Italy, an American
couple was so shocked at what they were charged for ice cream and water at a
restaurant they called police. The couple went to a cafe with a relative for
some sweet treats after dinner, and got three ice creams and a bottle of water.
The server brought them a bill for $56. “We’d just paid 59 euros for our
entire dinner, including a liter of wine, and then were charged 42 euros for
gelato!” the husband told The Local. The server informed the couple that
they had actually gotten a break because the normal $3.35 per-person cover
charge had been waived. They paid the bill, but returned the following day with
police to investigate the legality of the charges. Police found that the prices
were clearly written down on the menu and ruled that nothing illegal had
occurred.
In Costa
Mesa, California, surveillance video at the El Pollo Loco showed a man
climbing through the drive-through window and ransacking the cash register in a
failed attempt to find money. Later that day, the man was wearing the same
clothes as in the video—a green T-shirt and a hat emblazoned with a bright pink
face—when he showed up to eat lunch there. The restaurant manager called police
who arrested him on multiple counts of burglary.
Have a wonderful weekend!
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